Download CPT Economics Additional MCQS with Answers

Additional MCQS-Introduction to Micro Economics
1. Find the correct match:
a) An enquiry into the nature and causes of
the wealth of the nation: A. C. pigou.
b) Science which deals with wealth: Alfred
Marshall.
c) Economics is the science, which studies
human behaviour as a relationship
between ends and scarce means which
have alternative uses: Robbins.
d) The range of our enquiry becomes
restricted to that part of social welfare that
can be brought directly or indirectly into
relation with the measuring rod of money:
Adam Smith.
2. The law of scarcity :
a) Does not –apply to rich, developed
countries
b) Applies only to the less developed
countries.
c) Implies that consumers want will be
satisfied in a socialistic system.
d) Implies that consumer’s wants will never
be completely satisfied.
3. Who expressed the view that “Economics is
neutral between ends”?
a) Robbins
b) Marshall
c) Pigou
d) Adam Smith
4. Which of the following is the best general
definition of the study of Economics?
a) Inflation and unemployment in a growing
economy.
b) Business decision making under foreign
completion.
c) Individual and social choice in the face of
scarcity.
d) The best way to invest in the stock market.
5. What implication(s) dose resource scarcity has
for the satisfaction of wants?
a) Not all wants can be satisfied.
b) We will never be faced with the need to
make choices.
c) We must develop ways too decrease our
individual wants.
d) The discovery of new natural resources is
necessary to increase our ability to satisfy
wants.
6. Rational decision making requires that:
a) One’s choices be arrived at logically and
without error.
b) One’s choices be consistent with one’s
goals.
c) One’s choices never vary.
d) One makes choices that do not involve
trade-offs.
7. Economics, according to Lionel Robbins , is a
_____
a) Normative science.
b) Applied science.
c) Positive science.
d) Experimental science.
8. Which of the following is a normative
statement?
a) Planned economies allocate resources via
government departments.
b) Most transitional economies have
experienced problems of falling output and
rising prices over the past decade.
c) There is a greater degree of consumer
Sovereignty in market economies than
planned economies.
d) Reducing inequality should be a major
priority for mixed economies.
9. Macro economics is also called economics.
a) Applied
b) Aggregate
c) Experimental
d) None of the above
10. An example of positive ‘economic analysis
would be:
a) An analysis of the relationship between the
price of food and the quantity purchased.
b) Determining how much income each
person should be guaranteed.
c) Determining the ‘fair’ price for food
d) Deciding how to distribute the output of the
economy.
11. Identity the correct statement:
a) In deductive method logic proceeds from
the particular to the general
b) Micro & Macro Economics are
interdependent.
c) In a capitalist economy, the economic
problems are solved by planning
commission.
d) Higher the prices lower is the quantity
demanded of a product is a normative
statement.
12. A study of how increases in the corporate
income tax rate will affect the national
unemployment rate is an example of
a) Macro economics.
b) Descriptive economics.
c) Micro economics.
d) Normative economics.
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Additional MCQS-Introduction to Micro Economics
13. Which of the following does not suggest a
macro approach for India?
a) Determining the GNP of India.
b) Finding the causes of failure of X and co.
c) Identifying the causes of inflation in India.
d) Analyses the causes of failure of industry
in providing large-scale employment.
14. Economics goods are considered scarce
resources because they
a) Cannot be increased in quantity
b) Do not exist in adequate quantity to satisfy
social requirements,
c) Are of primary important in satisfying social
requirement.
d) Are limited to man made goods
15. From the national point of view which of the
following indicates micro approach?
a) Per capital income of India.
b) Under employment in agricultural sector.
c) Lock out in TELCO.
d) Total savings in India.
b) All economics decisions are taken by private
entrepreneurs.
c) Economic decisions are partly taken by the
state and partly by the private entrepreneurs.
d) None of the above.
21. The central problem in economics is that of
a) Comparing the success of command versus
market economies.
b) Guaranteeing that production occurs in the
most efficient manner.
c) Guaranteeing a minimum level of income for
every citizen.
d) Allocating scarce resources in such a manner
that society’s unlimited needs or wants are
satisfied as well as possible.
22. Which of the following bundles of goods could
not be produced with the resources the
economy currently has?
a) a
b) b
c) c
d) D
16. In a free market economy the allocation of
resources is determined by
a) Votes taken by consumers.
b) A central planning authority.
c) By consumer preference.
d) The level of profits of firms.
17. A capitalist economy uses…………as the
principal means of allocating resources.
a) Demand
b) Supply
c) Efficiency
d) Prices
18. In a free market economy, when consumers
increase their purchase of a good and the level
of ……. Exceeds……… ……………. Then
prices tend to rise.
a) Demand, supply
b) Supply, demand
c) Prices, demand
d) Profits, supply
19. Which of the following would be considered a
disadvantage of allocating resources using a
market system?
a) Income will tend to be unevenly
distributed.
b) Significant unemployment may occur.
c) It cannot prevent the wastage of scarce
economic resources.
d) Profits will tend to be low.
20. In a mixed economy,
a) All economic decisions are taken by the central
authority.
23. An economy achieves “productive efficiency”
when:
a) Resources are employed in their most
highly
valued uses.
b) The best resources are employed,
c) The total number of goods produced is
greatest.
d) Goods and services are produced at least
cost
and no resources are wasted.
Use the Figure below to answer questions24-26.
24. Which point on the PPF shows a “productive
efficient “level of output?
a) A
b) B
c) C
d) All of the above.
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Additional MCQS-Introduction to Micro Economics
25. Which of the following clearly represents a
movement toward greater productive efficiency ?
a) A movement from point A to point B.
b) A Movement from point C to point D.
c) A movement from point F to point C.
d) A movement from point E to point B.
a) Slower economic growth in the future
b) Greater economic growth in the future.
c) No change in our economic growth rate.
d) Greater capital accumulation in the future.
Use the Figure below to answer questions 32-38
26. Which of the following illustrates a decrease in
unemployment using the PPF?
a) A movement from down along the PPF.
b) A rightward shift of the PPF.
c) A movement from a point on the PPF to a
point inside the PPF.
d) A movement from appoint inside the PPF to
a point in the PPF.
27. If the PPF is linear, i.e., a straight line, which of
the following is true?
a) As the production of good increases, the
opportunity cost of that good rises.
b) As the production of good increased, the
opportunity cost of that good falls.
c) Opportunity costs are constant.
d) The economy is not at full employment
when operating on the PPF.
28. Periods of less than full employment
correspond to
a) Points outside the PPC.
b) Points inside the PPC.
c) Points on the PPC.
d) Either points inside or outside the PPC.
29. Which of the following would not result in an
rightward shift of the PPF?
a) An increase in investment in capital stock.
b) A reduction in the labour unemployment rate.
c) The discovery of new oil deposits in India.
d) An increase in the number of people taking
management-training course.
30. During presidential election campaigns,
candidates often promise both more ‘gun’ and more
‘butter’ if they are elected. Assuming unemployment
is not a problem, what possible assumption are they
making but not revealing to their audience?
a) There will be a sufficient increase in the
supply of natural resources used to
produce “gun” and ‘butter’
b) That there will be an improvement in the
technology of both ‘gun’ and ‘butter’
production
c) That there will be an increase in the labour
force.
d) All of the above.
31. What is one of the future consequences of an
increase in the current level of consumption in
India?
32. Which of the following represents the concept
of trade-offs?
a) A movement from point A to point B.
b) A movement from point U to point C.
c) Point W.
d) Point U.
33. Which of the following would not move the
PPF for this economy closer to point W?
a) A decrease in the amount of unemployed
labour resources.
b) A shift in preferences toward greater
capital formation.
c) An improvement in the overall level of
technology.
d) An increase in the population growth rate.
34. Moving from point A to point D, what happens
to the opportunity cost of producing each additional
unit of consumer goods?
a) It increases.
b) It decreases.
c) It remains constant.
d) It increases up to point B, and then falls
thereafter.
35. What is the opportunity cost of moving from
point A to point B?
a) 100 units of capital goods.
b) 8 units of consumer goods.
c) 90 units of capital goods.
d) 10 units of capital goods.
36. Unemployment or underemployment of one or
more resources is illustrated by production at point
a) A.
b) C.
c) U.
d) W.
37. Which of the following is a reason for the
curvature or bowed-out shape of the PPF?
a) Falling unemployment as we move along
the curve,
b) The economy having to produce less of one
good in order to produce more of another good.
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Additional MCQS-Introduction to Micro Economics
c) Opportunity costs increase as more of a
good is produced.
d) None of the above.
38. Which of the following is a reason for the
negative slope of the PPF?
a) The inverse relationship between the use of
technology and the use of natural resources.
b) Scarcity; at any point in time we have limited
amounts of productive resources.
c) Resource specialization.
d) Increasing opportunity costs.
39. capital intensive technique would get chosen in
ar
a) Labour surplus economy.
b) Capital surplus economy.
c) Developed economy.
d) Developing economy.
40. Labour intensive technique would get chosen
in a
a) Labour surplus economy,
b) Capital surplus economy.
c) Developed economy.
d) Developing economy.
41. Ram; my corn harvest this year is poor.
Krishna: Don’t worry. Price increases will compensate
for the fall in quantity supplied.
Vinod: climate affects crop yields. Some years are
bad, others are god.
Madhur: The Government ought to guarantee that
our income will not fall. In the conversation the
normative statement is made by
a) Ram
b) Krishna
c)Vinod
d) Madhur
42.
Consider the following and decide which, if
any, economy is without scarcity:
a) The pre-independent Indian economy,
where most people were farmers.
b) a mythical economy where everybody is a
billionaire.
c) any economy where income is distributed
equally among its people.
d) None of the above.
43. Which of the following is not a microeconomic
subject matter?
a) The price of mangoes.
b) A mythical economy where everybody is a
billionaire.
c) Any economy where income is distributed
equally among its people.
d) Nome of the above.
44. Which of the following is not one of the four
central questions that the study of economics is
supposed to answer?
a) Who produces what?
b) When are goods produced?
c) Who consumes what?
d) How are goods produced?
45. If the marginal (additional opportunity cost is a
constant then the PPC would be
a) Convex
b) Straight line
c) Backward bending
d) concave
46. Larger production of ---------- goods would
lead to higher production in future.
a) Consumer goods
b) Capital goods
c) Agricultural goods
d) Public goods
47. The branch of economic theory that deals with
problem of allocation of resources is
a) Micro-economic theory.
b) Macro-economic theory.
c) Econometrics.
d) None of the above
48. Which of the following is likely to cause an
inward a country’s PPC?
a) Earthquake destroying resources of the
country.
b) Scientists discovering new machines.
c) Workers getting jobs in the new metro
project.
d) The country finds new reserves of crude oil.
49. The various combinations of goods that can
be produced in any economy when it uses its
available sources and technology efficiently are
depicted by.
a) Demand curve.
b) Production curve.
c) Supply curve.
d) Production possibilities curve.
50. In an economy people have the freedom to
buy or not to buy the goods offered in the market
place, and this freedom to choose what they buy
dictated what producers will ultimately produce. The
key term defining this condition is
a) Economic power of choice.
b) Consumer sovereignty.
c) Positive economy.
d) Producer sovereignty.
51. The term ‘Economics’ owes its origin to the
Greek word
a) Aikonomia
b) Wikonomia
c) Oikonomia
d) None of the above
52. Oilinomia means
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Additional MCQS-Introduction to Micro Economics
a) Industry
b) Household
c) Services
d) None of these
d) None of the above
53. Adam Smith published his masterpiece “ An
enquiry into the nature and cause s of wealth
of nation ‘ in the year
a) 1776
b) 1786
c) 1756
d) 1766
54. The classical economists defined Economics
as
a) The science of welfare
b) The science o scarcity
c) The science of wealth
d) The science of wealth and welfare
55. Lionel Robins published his famous book
”Nature of significance of Economics” in the year
a) 1935
b) 1933
c) 1931
d) 1937
56. According to ……………….. Economics is the
“the study of how in a civilized society one obtains
the share of what other people have produced and
of how the total product of society changes and is
determined.”
a) Jacob Comer
b) Henry Smith
c) Pigou
d) Paul A. Samuelson
57. ‘Economics is what Economists do’ is given by
a) Jacob Viner
b) Henry Smith
c) Pigou
d) Paul A. samuelson
58. In which economics system all the means of
production are owned and controlled by private
individuals for profits.
a) Socialism
b) Capitalism
c) Mixed economy
d) Communism
59. Economics may be defined as the science that
explains …………………….
a) The choices that we make as we cope with
scarcity
b) The decisions made by politicians
c) The decisions made by households
d) All human behavior
60. Scarcity is a situation in which………………..
a) Wants exceed the resources available to
satisfy them
b) Something is being wasted
c) People are poor
61. Under inductive method , the logic proceeds
from
a) General to particular
b) Positive to normative
c) Normative to positive
d) Particular to general
62. When productivity increases………..
(a) Prices rise
(b) Living standards improve
(c) There are fewer good jobs
(d) Living standards deteriorate
63. Macro Economics is the study of…………
(a) All aspects of scarcity
(b) The national economy and the global
economy as whole
(c) Big businesses
(d) The decisions of individual businesses and
people
64. The task of economic science is to……….
(a) Save the earth from the overuse of natural
resources
(b) Help us to understand how the economics
world works
(c) Tell us what is good for us
(d) Make moral choices about things like drugs
65. Who among the following gave the definition of
Economics as “Science which deals with
wealth”?
(a) J.K. Keynes
(b) H.C. Dickinoson
(c) Henry Smith
(d) J. B. say
66. Production Possibilities curve is also known as
(a) Demand curve
(b) Supply curve
(c) Indifference curve
(d) Transformation curve
67. Socialist economy is a
(a) Planned economy
(b) Mixed economy
(c) Profit oriented economy
(d) None of these
68. Freedom of choice is the advantage of
(a) Socialism
(b) capitalism
(c) mixed economy
(d) communism
69. In 1940, Hitler’s air force bombed Rotterdam, a
beautiful city in Holland. Twenty five thousand
homes, 1200 factories, 69 schools and 13
hospitals were destroyed. Nearly 75,000 people
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Additional MCQS-Introduction to Micro Economics
died. 35% of the port was gutted by the German
army. The above destruction would mean:
(a) A complete wipe off of the production
possibilities Curve (PPC) of Rotterdam.
(b) An outward shift of the PPC of Rotterdam.
(c) An inward shift of the PPC of Rotterdam.
(d) A downward movement on the same PPC
of Rotterdam.
70. If immediately after the war, Rotterdam rebuilt
its port with the help of most up to date craned,
docks and cargo handling technology. By the end
of the reconstruction, ships were loading and
unloading faster and at lower cost than anywhere
in the world. It became more efficient than it was
before the destruction. This means:
a) Rotterdam has come back to its original PPC.
b) Rotterdam has shifted to a higher PPC.
c) Rotterdam has shifted to a lower PPC.
d) Nothing can said.
Use Table to answer question 71-73 production
possibilities
Production A
B
C
D
E
F
Possibilities
Good A
0
1
2
3
4
5
Good B
30
28
24
18
10
0
71. According to Table the opportunity cost of
increasing Good A’s production from 2 of4 units is
equal to:
a) 10 units of B
b) 1 units of B
c) 24 units of B
d) 2 units of B.
72. According to Table, the opportunity cost of
increasing one unit of Good B from 10 units to
18units is:
a) 3 units of A.
b) 1 units of A.
c) 0.125 units of A.
d) 0.5units of A.
73. Given the data in Table , as one moves from
successively from point a to point B, C, D, E and F,
the opportunity cost of Good A:
a) Increases as more of good A is produced,
b) Decreases as more of good A is produced.
c) Remains constant.
d) Is always equal to one unit of B.
74. The economic analysis expects the consumer
to behave in a manner which is:
a) Rational
b) Irrational
c) Emotional
d) Indifferent
Use table for questions 75 to 79 production
possibilities (alternative)
A
B
C
D
E
F
Hot pockets Eggs
15
12
9
6
2
0
0
0
11
15
18
20
75. According to the production possibilities curve
in Table, a combination of 12 Hot pockets and 11
Eggos:
a) Is attainable but involves the efficient use of
society’s resources.
b) Is attainable but involves the unemployment
or inefficient use of some of society’s
resources.
c) Is not attainable given society’s current
resources and technology.
d) May be produced only if the production
possibilities curve shifts inward.
76. According to the production possibilities curve
in Table , a combination of 3Hot pockets and 15
Eggos:
a) Is attainable and it involves an efficient use
of society’s resources.
b) Is attainable but involves the unemployment
or inefficient use of some of society’s
resources.
c) Is not attainable given society’s current
resources and technology.
d) May be produced only if the production
possibilities curve shifts inward
77. Referring to table , in moving from point D to
point C, the opportunity cost of 1 more Hot Pocket
is:
a) 4 eggos.
b)1/6 eggos
c)1 eggo.
d)4/3 eggos
78. Given the data in Table, as one moves
successively from point A to point B, C, D, E, and F
the opportunity cost of egos:
a) Increases as more /egos are produced
b) Decreases as more Eggos are produced.
c)Remains constant as more Eggos are
produced.
d) Cannot be measured.
79. Given the data in Table , as one moves
successively from point F to points E, D, C,B, and
A opportunity cost of Hot Pockets:
Introduction to Micro Economics
a) Increases as more hot potatoes are
produced.
b) Decreases as more hot potatoes are
produced.
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Additional MCQS-Introduction to Micro Economics
c) Remains constant as, more Hot potatoes
ate produced.
d) Cannot be means.
Questions 85 to 87 are based on igure 1 which
shows production possibilities curve (PPC) for
grape juice and wine
80. Which of the following would not cause an
economy’s production possibilities an curve to shift
to the right?
a) The discovery of new super-conductivity
materials, which makes manufacturing more
efficient.
b) A decrease in unemployment.
c) Improvements in technology.
d) Widespread application of irrigation to
agricultural land.
81. In drawing a production possibilities curve,
which of the following is (are) held constant?
a) The supply of natural resources and supply
of labor.
b) Technology and the educational attainment
of the work force.
c) Both (a) and (b).
d) None of the above.
82. Which of the following is incorrect?
a) The central problem in economics is that of
allocating scarce resources in such a manner
that society’s unlimited needs are satisfied as
will as possible.
b) In mixed economy, the government and the
private sector interact in solving the basic
economic questions.
c) Microeconomics best describes the study of
the behavior of individual agents.
d)An important theme in economics is that
market system are better than command
(socialistic) economies.
83. Which of the following is correct?
a) Normative economics is not concerned with
value judgements .
b) A market is a process that reconciles
consumer decision, production decisions and
labour decisions.
c) A mixed economy has a certain level of
government intervention in the economy along
with private sector ownership of the economy.
d) (b) and (c).
84. Indian economy is mixed economy because:
a) Agriculture and industry have both
simultaneously developed in India.
b) Agriculture and industry have both
developed in the public sector.
c) Private ownership and public ownership
over means of production co-exit.
d) Any of the above.
85. The opportunity cost of increasing wine
production from D to E is :
a) 0 litres of grape juice.
b) 5 litres of grape juice.
c) 1 litres of wine.
d) 0.2 litres of wine.
86. Assuming that the PPC does not shift, which
of the following is true?
a) Point A is desirable but is inefficient.
b) Point D represents more efficient allocation
of resources than points A and f.
c) Point H is desirable but is not attainable.
d) If wine production equals 7 litres, the
maximum amount of grape juice that can be
produced simultaneously is 28 litres.
87. The PPC in the diagram reflects:
a) Increasing opportunity cost of more wine
production and constant opportunity cost of
more grape juice production.
b) Increasing opportunity cost of more wine
production and decreasing opportunity cost of
more grape juice production
c) Decreasing opportunity cost of more wine
production and decreasing cost 01 more grape
juice production.
d) Increasing opportunity cost of more wine
production and increasing cost of more grape
juice production.
88. Which of the following statements is correct?
a) In a two- good economy, the production
possibilities frontier reflects the maximum
amount of on good that can be produced when
a given is produced.
b) Microeconomics is the study of the behavior
of the economy as a whole.
c) Positive economics focuses on welfare of
the people of a society.
d) None of the above.
89. Which of the following is correct?
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Additional MCQS-Introduction to Micro Economics
a) The production possibilities frontier shows
the maximum combination of output that the
economy can available.
b) Increasing opportunity cost implies a
production possibility frontier concave to the
origin.
c) Free markets are the markets in which the
governments do not intervene.
d) All of the above are correct.
91. With the same amount of resources, a farmer
can feed the following combination of goats
and horses:
Goats
Horses
Option II
168
150
97. according to Robbins, ‘means’ are :
a) Scarce
b) Unlimited
c) Undefined
d) All of these
98. Which of these would cause a rightward shift
of the PPC curve?
a) Improvement in technology.
b) Greater capital formation
c) Increase in pollution.
d) All of these.
90. Price theory is an important of _____
Economics.
a) Micro
b) Macro
c) Development
d) Welfare
Option I
a) General to particulars
b) Particulars to general
c) Both (a) and (b)
d) None.
99. If the opportunity cost is constant , than PPC
would be:
a) Convex
b) straight line
c) Backward bending d) concave
44
50
Given that option available with him, what is the
opportunity cost to the farmer of feeding one
horse?
a) 1 goat.
b) 3 horses.
c) 3 goats.
d) 18 goats.
100.
economics is the study of :
a) How society manages its unlimited
resources
b) How to reduce over wants until we are
satisfied
c) How society manages its scarce resources
d) How to fully satisfy our unlimited wants
92. Which of the following involve trade-offs.?
a) Talking a nap
b) All of these answers involve trade-offs.
c) Watching a football game on Saturday
afternoon.
d) Going to university
93. Choice is created by the
a) abundance of resources
b) urgency of needs
c) non- availability of resources
d) scarcity of resources
94. Under a free economy, price are:
a) Regulated
b) Determined through free interplay of
demand and supply
c) Party regulated
d) None of these
95. Which of the following falls under micro
economics?
a) National income
b) General Price level
c) Factor Pricing
d) National saving and investment
96. Under Inductive method, the logic proceeds
from:
ANSWER WITH DETAILED RESOLVING
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Additional MCQS-Introduction to Micro Economics
Note: - In CPT exam, there is no need to give
reasons, this reasons are given only for the
understanding of the students:
Ans.1(c) The correct definitions are
 Science of material well- being “Alfred Marshall.”
 “The range of our inquiry becomes restricted
to that part of social welfare that can be
brought directly or indirectly in to relation with
the measuring rode of money ”
-A.C. Pigou
 Science of wealth –“Adam Smith ”
 Economics is the science, which studies
human behavior as a relationship between
ends and scarce means which have
alternative uses:
Robbins.
Ans 2(d) The law of scarcity implies that
consumer’s wants will never be completely
satisfied because human wants are unlimited
wants and resource have scarcity
Ans 3 (a) Robbins the view that economics is
nature between wants and it means It is not for
economists to pass value judgments.
Ans 4(c) General definition of the study of
economics is the individual and social choice in the
face of scarcity, because an individual or society
have to choose their unlimited wants with their
scarce resources.
Ans 5 (a) The scarcity of resources is with
reference to the unlimited want and all wants
cannot be satisfied within the scarce recourses.
Ans 6(b) Rational decision-making requires that
one’s choices be consistent with one’s goals,
otherwise maximum satisfaction cannot be
achieved.
Ans 11(b) The correct statement is that Micro and
Macro – economic are inter-dependent
Ans 12(a) Macro economics is the study of overall
phenomena as a whole rather than its individual
parts. Hence A study of how increases in the
corporate in unemployment rate are an example
Macro statement.
Ans 13(b) finding the causes of failure of X and
co.’ is not a macro statement approach; it is micro
approach because micro deals part of the society.
Ans 14(b) Economic goods are considered scarce
resources because they do not exist in adequate
quantity to satisfy social requirements, If they exist
in adequate quantity then economic goods are
considered unlimited resources.
Ans 15(c) ‘Lookout in TELCO’ IS MICRO
approach, because micro deals with individual part
of the society rather than all the units combined.
Ans 16(c) In a free market economy the allocation
or resources is determined by the principle of
consumer sovereignty and
What should be produced be decided by produced
it will be decided by the consumer’s preference.
Ans17(d) A capitalist economy uses ‘prices’ as the
principal means of allocating resources, because
price mechanism have important role in capitalist
economy to determine price
Ans18(a) In a free market economy , with the help
of the demand and supply price will be decided,
and when consumers increases their purchase the
level of demands exceeds supply then price tend
to rice.
Ans 7(c) Positive science.
Ans 8(d) Normative statement refers to “What
ought to be” or it offers advice, and it is advisable
that to reduced inequality, priority is to be given for
mixed economies.
Ans. 9(b) Macro economics is also called
aggregated economics.
Ans. 10 (a) An example of ‘Positive’ economics
analysis would be the low of demands and it
explains an analysis of the relationship between
the price of food and the quantity purchase
Ans 19(a) In market system there is wide gap of
income between the rich and the poor, which
mainly arises due to unequal
Distribution of income. So it is a disadvantage if the
capitalist economy there is coexistence of public
private sector.
Ans 20(c) In a mixed economy economics
decisions are partly taken by the state and partly
by the private entrepreneurs because in a mixed
economy there is coexistence of public and private
sector.
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Additional MCQS-Introduction to Micro Economics
Ans 21(d) The central problem in the economics
is that what, how and for whom to produced and it
is allocating scarce resource in such a manner that
society’s unlimited needs and wants are satisfied
as well as possible .
Ans22 (d) An economy cannot produced outside
the PPC curve because current resource of the
economy are constant ,in the finger ’d’ Point is
outside the PPC which is not possible to produce.
Ans 23 (d) “Productive efficiency “means goods
produced at any point on the PPC and when an
economy produced on the PPC curve then we can
say that goods and service that produced at list at
cost and no resource are wasted
Ans 24(d) “Productive efficiency “means goods
produced at any point on the PPC
And in the finger all the points on the A,B, and C
lines on PPC so all points PPC shows a productive
efficient level of output
Ans 25(c) Any point move from inside the PPC to
a point on the PPC to a point on the PPC,
represents A movement towards greater
productivity efficiency because productivity
efficiency line on PPC so movement from ‘F’ to ‘C’
is correct answer.
Ans 26(d) Unemployment can be decreased by
the utilization of full resources and any movement
from a point inside the PPF to a point on the PPF
represents full utilization of resources.
Ans 27(c ) Principle of increasing opportunity cost
that makes the PPC concave to the origin and PPC
will be straight line of opportunity cost is constant.
Ans28(b) period of less then full employment
means’ unemployment’ and in this case an
economy operate inside the PPC, because if an
economy produce on the PPC curve, it represents
full employment of resources.
Ans 29(b) A reduction in the labour unemployment
rate, created ’employment’ and increase in
employment shift PPC curve , but not the rightward
shift of PPC.PPC can shift to the right or economic
growth are possible in the following circumstances1. Improvement in overall technology
2. Greater capital formation
3. Increase in population growth/labour force
Ans 30 (d) Both ‘gun’ or butter can be produced by
increase in supply of natural resource improvement
of technology and increase in labour force.
Ans 31(a) Economic growth depends upon capital
formation , increase in current level of consumption
growth in the future.
Ans 32(a) A movement from point A to point B.
represents the concept of trade-offs.
Ans 33(a) A decrease in the amount of
unemployed labour resources would not mean
growth of resources so it would not move the PPF
for this economy closer to point W.
Ans 34(a) Moving from point A to point D, the
opportunity cost of producing each additional unit
of consumer goods increases.
Ans 35(d) the opportunity cost of moving from
point A to point B is 10 units of capital goods(10090)
Ans 36(c) Any point inside PPC shows
unemployment or underemployment of one or
more resources it is illustrated by production at
point ‘U’.
Ans37 (c) PPC looks concave to the origin
because of increasing marginal opportunity cost.
Ans 38(b) the negative slope of the PPF is due to
scarcity; at any point in time we have limited
amounts of productive resources
Ans 39 (b) Economy as to decided about
technique of production on the basic of cost labor
and capital. A labor surplus economics choose
labor intensive technique and a capital surplus
economy chooses capital intensive technique.
Ans40 (a) reason same as ans 39.
Ans 41(d) normative statement refers to “what
ought to be” or it makes and assignment of an
activity and offers advice. Hence the statement
made by madhur is the normative statement.
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Additional MCQS-Introduction to Micro Economics
Ans 42(d) The want of human being are unlimited.
If one want is satisfied, anther want good crop up.
Since wants are unlimited recourses with these
want can be satisfied are limited, a choice has to
be made .
Ans 43(d) Micro-economics is the study of
particular firm, particular household. Individual
price, wages, income, Industry and a particular
commodity. Hence, the national economy’s annual
rate of growth is not a micro-economic subject
matter.
Ans 44(b) The central problems are 1. What to
produce 2. How to produce 3.For whom to produce
4. What provision should be made for Economic
Growth: Hence, when are goods produced? Is not
one of the four central questions that the study of
economics is supposed to answer?
Ans 45(b) if marginal opportunity cost is constant
then the PPC would be straight line.
Ans46 (b) Capital goods helps in further
production so their large production would lead to
higher production in future.
Ans 47(a) The branch of economic theory that
deals with the problem of resources is microeconomic theory.
Ans 48(a) Earthquake destroying resources will
shift PPC inward, as resources of production will
reduce.
Ans 49(d) Production possibility curve may be
defined as a curve which shows the various
combinations of two goods that can be produced in
any economy with given amount of resources and
technology.
Ans 50 (b) “In an economy people have the
freedom to buy or not to buy the goods offered in
the market place, and this freedom to choose what
they buy dictates what producer will ultimately
produce. ” This is known as principle of consumer
sovereignty. In a free market economic the
allocation of resources is determined by the
consumer preference.
Ans 52(b) ‘Oiknonomia’ means ‘household ‘.
Ans 53(a) Adam Smith published his masterpiece
in the year 1776
Ans 54(c) Classical economics (Adam Smith )
defined economics as ‘The science of weath’.
Ans 55(c) Lionel Robbins published his book in
the year 1931.
Ans 56(b) Henry Smith defined economics as
science of dynamic growth and development.
Ans 57(a) Jacob viner defined Economics in what
Economists do’.
Ans 58(b) Under capitalism economics system , all
the means of production are privately owned for
private profits .
Ans 59(a) Economics may be defined as ‘choice in
the face of scracity’.
Ans60 (a) Scarcity is a situation in which
wants exceed the resources available to satisfy
them
Ans 61(d) Inductive method, the logic proceeds
from particular to general
Ans 62(b) When productivity increase living
standards improve
Ans 63(b) Macro Economics is the study of the
national economy and the global economy as
whole
Ans 64(b) The task of economic science is to help
us to understand how the economics world works
Ans 65(d) J. B. says that gave the definition of
Economics as “Science which deals with wealth”
Ans 66(d) Production Possibilities curve is also
known as transformation curve
Ans 67(a) Socialist economy is a planned
economy
Ans 51(c) the term ‘ Economics’ owes its origin to
the Greek word ‘Oiknonomiia’ means ‘ household ‘.
11
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Additional MCQS-Introduction to Micro Economics
Ans 68(b) Freedom of choice is the advantage of
capitalist economy.
Ans 69(c) War destroying resources will shift PPC
inward as resources of production will reduce.
Ans 70 (b) Improvement in overall technology will
results in shift of PPC to the right.
Ans 71 (b) Opportunity cost of increasing Good
A’s production from 2 to 4 units is equal to 14 units
of B (24-10)
Production Good A
Good B
Increasing
Opportunity
cost
Possibilities
Ans 80 (b) A decrease in unemployment will not
result in growth of resources which would not
cause an economy’s production possibilities
curve to shift to the right
Ans 81 (c) In drawing a production possibilities
curve, both are held constant
(i)
The supply of natural resources and the
supply of labour
(ii)
Technology and the educational
attainment of the work force.
Ans 82(b) In mixed economy, the government and
the private sector interact in solving the basic
economic questions.
A
0
23
-
Ans 83(b) statement (b) and (c) are correct.
B
1
28
2
C
2
24
4
Ans 84 (c) Indian economy is mixed economy
because private ownership and public ownership
over means of production co-exist.
D
3
18
6
E
4
10
8
F
5
0
10
Ans 85 (b) The opportunity cost of increasing wine
production from D to E is liters of grape juice.
Ans 86 (c) Point H is desirable but is not attainable
, as PPC does not shift.
Ans 72(a) As one moves from successively from
point A to point B, C, D, E and F, the opportunity
cost of Good A Increases as more of good A is
produced.
Ans 87 (d) The PPC in the diagram reflects
increasing opportunity cost of more wine
production and increasing cost of more grape juice
production.
Ans 74(a) The economic analysis expects the
consumer to behave in a manner which is Rational
Ans 88(a) “In a two –good economy, the
production possibilities frontier reflects the
maximum amount of the other good is produced ”
is the only correct statement .
Ans 75 (c) A combination of 3 Hot pockets and 11
Eggs is not attainable given society’s current
resources and technology
Ans 77 (d) D to point C, the opportunity cost of 1
more Hot pocket is 4/3 Egos i.e.(15-11/9-6).
Ans 89(a) Price theory is an important constituent
of Micro Economics
Ans 90 (d) all of the statements are correct.
Ans 78 (a) As one moves successively from point
A to points B, C, D, E, and A, the opportunity cost
of Hot pockets increases as more hot pockets
increases as more hot potatoes are produced.
Ans 91(c ) The opportunity cost to the farmer of
feeding one horse 3 goats I.e. 168-150/50-44
Ans 79 (a) As one moves successively from point
F to points E, D, C, B, and A, the opportunity cost
Hot pockets increases as more hot potatoes are
produced.
Ans 93(d) According to Robbins, choice is created
scarcity of resources.
Ans 92(b) All the answers involve trade-offs.
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Additional MCQS-Introduction to Micro Economics
Ans 94(b) Under a free economy prices
determined the through price mechanism (free
interplay of demand and supply)
Ans 95(c) Product pricing and factor (LLCE)
Pricing (RWIP) fall under micro economics
Ans 96(b) Under inductive methods logic
Proceeds from particular to general or from
individual to universal.
Ans 97(b) According to Robbins means resources
are scarce and wants ate unlimited.
Ans 98(d) PPC right words shifts, cause economic
growth
Ans 99(b) PPC Would be straight line downward
sloping, if opportunity cost in constant.
Ans 100(d) economics is the study of how to fulfill
our unlimited wants.
13
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